Message from the President Dec.2007

a monthly magazine for our employee Dec.2007

Various Thoughts on South America: Emerging Economies and Japan

In October 2007, I made a tour of Brazil and Argentina as part of our group’s research on future global strategies. Meitec’s global strategies call for our readiness to meet the globalization initiatives of our client Japanese manufacturers. At the moment, it’s still premature for us to enter South America in the sense of full-fledged business. Japanese corporations including Meitec, however, should keep an eye on the development of emerging economies on the path of rapid economic advancement, including the BRICs economies (Brazil, Russia, India and China), which are likely to make significant economic advances in the 21st century.

On my tours overseas, I go to the local offices of the Japan External Trade Organization (JETRO) and Japanese general trading companies to gain invaluable, comprehensive information and to tour local factories run by Japanese manufacturers. In addition, I make a point of visiting local shopping malls and supermarkets as much as time permits, because doing so gives me opportunities to observe people’s daily lives. Through these side trips, I’ve come to believe that at least in the economic sphere the world is without a doubt moving in the direction of convergence. For instance, all recently built large shopping malls in emerging nations, whether they’re in Brazil, Russia or Vietnam, look very much alike in terms of products and brands they carry, as well as their price tags. As I step into one of these malls, I often begin to wonder which country I’m in. Needless to say, these products aren’t accessible by ordinary citizens, unlike in Japan. In reality, the buyers in emerging nations are comparatively limited in number. This is evident if you go to remote provinces in an emerging country, where you may encounter radically different sights completely removed from modern civilization. The other side of the reality, however, is that regardless of the country there are always people who, provided they have sufficient wealth, desire the same kinds of apparel, electric and electronic gear and automobiles. Cellphones, for instance, are becoming an indispensable part of people’s daily lives in all countries. I don’t know if that’s the outcome of skillful global corporate marketing or spontaneous standardization of lifestyles as a result of Internet-aided real-time information sharing on a global scale, but we must be aware that it’s happening as a matter of course. Underneath this insight lies the realization that advanced civilization isn’t the exclusive property of industrial nations and that virtually all people around the globe, as they reach a certain level of economic advancement, are moving in the direction of enjoying the benefits of modern life like those available now in advanced nations, even though the penetration of such benefits through the ranks of society may vary from nation to nation.

Another aspect of reality that I’ve noticed and confirmed over and over again everywhere I go is the trust accorded to Japanese industrial products, or Japan’s branding dynamics. Japanese products, whether they’re automobiles or electric/electronic equipment, are recognized as “high-end products” in virtually all countries. At a shopping mall in Manaus, a city located amid the wilderness of the Amazon, I saw LCD TVs by Japanese manufacturers displayed proudly in the central section of a home appliance department. The prices are generally 30% higher than in Japan due to Brazilian tariffs, but the products seemed to appeal very strongly to Brazilian shoppers. Also in Brazil, where all Japanese cars are considered luxury models, I saw Japanese compact cars, which in Japan are classified in the “affordable” category, sporting full-leather interiors. In Argentina, I found the direct retail store of a Japanese electronic manufacturer selling its digital and video cameras like no others. Evidenced by the popular notion of “Cool Japan” around the globe, Japanese anime and Japanese character goods transcend borders, reaching TV audiences and consumers not just in advanced nations but also in emerging countries. Japanese food is also very popular. In Moscow, Japanese restaurants are doing great business with local patrons. Many now serve authentic tempura and sushi, unlike pseudo-Japanese dishes typically served by Japanese restaurants overseas in the past.

Situated halfway around the globe, Brazil’s a very distant place for Japanese people. Even today, it takes two full days including transfers to reach Brazil by plane. Brazilian people, with the exception of the Japanese-Brazilians, know little about Japan, and their knowledge about Japan may be more limited than what a typical Japanese person knows about Brazil. They appear to have little interest in Japan. And yet, Japanese industrial products and anime are extremely popular there. In Japan, many barriers to overseas workers desiring employment in Japan prevent sufficient exchanges based on person-to-person contacts. For Japan to sustain its growth in global society, solid person-to-person exchanges, more than culture and product-based exchanges, are essential. The Japanese must initiate proactive exchanges with a greater number of people outside of Japan, or else Japan will find it increasingly difficult to maintain its economy over the medium and long term. In the Latin American countries far away from Japan, I reconfirmed my belief that the bridge engineering business undertaken by the Meitec Group will encourage personal exchanges, which in turn will positively impact Japan’s industrial society as a whole..

December, 2007